Cybex’s Second Quarter Net Sales Down

MEDWAY, MA -- Cybex International Inc. had second quarter 2009 net sales of $27.8 million compared to $33.1 million for the corresponding 2008 period, according to the company’s financials released yesterday. Cybex reported a net loss for the second quarter of 2009 of $2.1 million, compared to net income of $0.1 million reported for the corresponding 2008 period. It also announced that it was in violation of certain financial covenants in its loan agreement, but the company is negotiating with its banks to receive waivers, Art Hicks, COO of Cybex, said in a conference call with analysts yesterday.

For the six months ended June 27, 2009, Cybex had net sales of $56.7 million compared to $72.9 million for 2008. The loss for the six months ended June 27, 2009 was $3.5 million compared to net income of $1.4 million for 2008.

John Aglialoro, chairman and CEO, said in a statement from the company, “The current sales environment continues to be weak. We believe our customers, particularly fitness clubs and similar facilities, continue to be cautious, delaying purchases. Margins have been negatively affected by several factors, most particularly the lower sales levels. We expect fitness clubs to resume purchasing to previous levels in the future, and in the meantime we are focusing on other markets that will represent incremental sales to Cybex.”

During the conference call, Aglialoro said that commercial sales were down worldwide for Cybex, but more so in North America and the United Kingdom, where large chains don’t seem to be spending as much as in Brazil, China, India and other developing countries where the economy hasn’t declined as drastically.

Aglialoro went on to say that the company was closely controlling costs, but the company was not reducing its pricing as drastically as some of its competitors. In fact, Hicks noted in the call that Cybex’s selling prices in 2009 were actually higher than in 2008.

Aglialoro said that the company has had layoffs, and remaining employees have taken pay cuts. Cybex also reduced its contributions to employees’ 401(k) plans.

Steel costs declined in the second quarter, but Aglialoro says that decline would have a greater affect on margins in the third quarter.